Having a second home away from home is pretty appealing. Spend time in it whenever you want a little getaway, then rent it out the remainder of the time — makes sense, right?
Before you jump in head first, ask yourself whether you’ve done all your research on what it takes to purchase a vacation home or if you’re simply looking at the opportunity through rose-tinted glasses.
To start, here are three things to ask yourself to help you decide if it’s a good idea:
Q: Can I afford a second home?
→ Two homes means two mortgage payments and two sets of property taxes, so keep in mind your current savings, mortgage, income, and any debts.
Q: Will I be able to rent the home out?
→ Renting out your second home when you’re not using it can help bring in additional income and pay off your mortgage, so if you plan to do this, make sure that the location where you purchase your home allows for short-term rentals. You’ll also want to consider both the time and cost that goes into maintaining the property.
Q: What are the property taxes in my desired location?
→ Tax rates vary considerably based on location, so it’s a good idea to look at taxes before you decide on an area.
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